Institute for Economic Advancement

Arkansas Home Sales – September 2010

By , October 28, 2010 12:38 PM

The Arkansas Realtors® Association (ARA) released their report on September home sales this morning.  The report notes that “home sales in September 2010 remained 21 percent below the state’s September 2009 pace when home-buyers were ramping up in advance of the initial deadline for the tax credit last November.”

Earlier in the week, the National Association of Realtors® (NAR) released data on existing home sales nationwide.  The NAR report noted that sales “remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.”  However, the headline on the NAR report, “September Existing-Home Sales Show Another Strong Gain,” emphasized the change from the previous month.   The report highlighted the fact that sales were up 10.0 percent (seasonally adjusted) compared to August.

In comparison to September 2009, the national report and the Arkansas report tell the same story.   Sales in 2010 are much lower than they were when a first-time home-buyer’s tax credit was in place.  However, when assessing the current state of the market and the near-term outlook, the NAR’s month-to-month comparison provides more timely information. 

In order to compare the more recent pattern of Arkansas home sales with the recent national statistics, it is necessary to explicitly take account of seasonal factors.  As noted in last month’s post on this topic, home sales follow a highly seasonal pattern.  This year, the typical pattern has been distorted by the expiration of the second round of home-buyer tax credits at the end of April.  Sales remained relatively strong in May and June as qualifying contracts continue to close, but dropped sharply in July.  The report from the NAR highlights recovery from that low point.

The chart below shows seasonally-adjusted home sales for Arkansas.  Two methods of seasonal adjustment are illustrated.  First, the “Direct” method applies the standard Census X-12 ARIMA procedure to the ARA data for the period January 2007 through December 2009, extrapolating the 2009 seasonal factors forward into 2010.  The second method applies the implicit seasonal factors from the NAR data:  Specifically, we use the most recent seasonal factors for the NAR’s “South” region, applying them to previous years’ data for Arkansas.

Sources:  Arkansas Realtors® Association, National Association of Realtors®, Institute for Economic Advancement

Sources: Arkansas Realtors® Association, National Association of Realtors®, Institute for Economic Advancement

The two methods of seasonal adjustment yeild similar results.  Seasonally adjusted sales were declining steadily during 2007 and 2008.  They recovered during 2009, but then dropped off after the expiration of the first round of tax credits near the end of the year.  Sales surged in March and April, as home-buyers rushed to take advantage of the second round of tax credits, then dropped off sharply to reach a low point in July.  This is the same pattern that is evident in the national sales statistics as well.

After hitting a low-point in July of this year, home sales in Arkansas have shown two months of increase.  The NAR report touted a 10% increase in September.  The corresponding figure for Arkansas is in the range of 15 to 18 percent (depending on the method of seasonal adjustment).  Compared to the low point in July, Arkansas home sales were up about 22 percent (using either method of seasonal adjustment).  The corresponding figure for nationwide home sales is 17.8 percent.

After making the adjustments necessary to legitimately compare month-to-month sales, the report on Arkansas home sales in September could carry the same headline as the NAR’s national report:   September Home Sales Show Another Strong Gain.

Arkansas Employment and Unemployment – September 2010

By , October 22, 2010 11:10 AM

This morning’s employment report from the U.S. Bureau of Labor Statistics and the Arkansas Department of Workforce Services showed that the labor market weakness recently evident in the national economic statistics is affecting Arkansas as well.   The new report showed that the number of unemployed Arkansans increased by nearly 1,900 in September.   As a result, the unemployment rate rose by two-tenths of one percent to 7.7%.  

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Once again this month, it is important to consider seasonal patterns when evaluating the data on payroll employment.  Without seasonal adjustment, the number of jobs counted in the payroll survey rose by more than 10,000.  However, as shown in the chart below, September is typically a month where employment expands sharply.   After adjusting for this recurring seasonal pattern, employment declined by 4,900.  When it comes to evaluating month-to-month job growth, the seasonally-adjusted data provide a more meaningful basis for comparison.  In fact, the inconsistency between comparing seasonally-adjusted household unemployment with not-seasonally-adjusted payroll employment is particularly evident in the data for September.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Some of the job losses over the past two months have been attributable to the lay-off of temporary Census workers.  As shown in the table below, Government employment declined by 2,400 in September.   Other important sectors showing job losses in September include Trade, Transportation, and Utilities; Construction; and Manufacturing.   Growth in manufacturing employment earlier in the year had been an encouraging sign.  But after six consecutive months of increase, employment in manufacturing has now declined in both August (-1,200) and September (-1,300).

Employment in service-providing sectors fared somewhat better in September.  Professional and Business services, Leisure and Hospitality Services, and Other Services showed seasonally-adjusted increases in September.  The Leisure and Hospitality category is another example where seasonal adjustment matters.  Typically, firms in this sector scale back after Labor Day.  Consequently, not-seasonally-adjusted employment in this sector actually declined by 1,200 jobs.  But this is a smaller decline that would usually be expected for the month.  Hence, after seasonal adjustment, employment rose by 300.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Sluggish job growth has been distinct characteristic of the current economic recovery–both in Arkansas and nationwide.  Recent data show increasing weakness in job growth.  Two factors are relevant:  First, the inventory correction that helped to boost production-related jobs earlier in the year appears to have largely run its course.  In addition, the direct effects of Federal stimulus programs have dissipated somewhat.  We are now in a period in which the economy is transitioning toward a lasting, self-sustaining recovery.  Employment growth is sure to pick up when these transitions are complete.  The key question is how long they will take.

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*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available here
Table – Seasonally Adjusted NFPE.

Metro Area Employment – A Slow Summer

By , October 1, 2010 12:55 PM

Earlier this week, the Bureau of Labor Statistics released its latest report on employment and unemployment in the nations Metropolitan Statistical Areas (MSAs).  The data indicate that it has been a slow summer for job growth in Arkansas’ MSAs.

Unemployment data for August (not seasonally adjusted) showed that the unemployment rate ticked up by one-tenth of a percent in three of the state’s MSAs, and was unchanged in the other four.  However, August is typically a month in which the unemployment rate experiences a seasonal decline.  Adjusting the data for this recurring seasonal pattern, the data show that unemployment rose substantially in each of the state’s seven metro areas.  For four of the seven metro areas, the increase in seasonally-adjusted unemployment in August follows an uptick in July as well.

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Payroll employment growth in Arkansas MSAs also showed weakness in August.  From July to August, employment increased in Fort Smith and Hot Springs, but declined in each of the other metro areas.   For the first eight months of the year, only Hot Springs and Texarkana have shown positive job growth.   Compared to the previous year, employment is lower in five of the seven MSAs, with positive year-over-year changes recorded for Jonesboro and Texarkana. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Since the onset of the recession in December 2007, cumulative job losses vary considerably across metro areas.  Employment in Jonesboro has recovered to about the same level as at the end of 2007.  At the other end of the spectrum, Fort Smith has seen job losses totalling 8.2 percent.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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